Interest Rates And Yield Curve Control, Part 4

Published Fri, 04 Dec 2020 08:49:37 -0500 on Seeking Alpha

Seeking AlphaEconomy | Market OutlookInterest Rates And Yield Curve Control, Part 4Dec. 4, 2020 8:49 AM ET|| Includes: BIL, DFVL, DFVS, DTUL, DTUS, DTYL, EDV, EGF, FIBR, FLAT, GBIL, GOVT, GSY, IEF, IEI, PLW, PST, SCHO, SCHR, SHV, SHY, STPP, TAPR, TBF, TBT, TBX, TLH, TLT, TMF, TMV, TTT, TYD, TYO, UBT, UST, VGIT, VGLT, VGSH, VUSTX, ZROZby: David KotokDavid Kotok Chief Investment Officer, Wealth Preservation, portfolio strategyCumberland Advisors.cls-1{fill:#024999;}SummaryWe've delivered a four-part series to show the sequence of elements that leads to yield curve control and the influence of the derivative mechanism now at work in the world as pandemic-driven global central bank activity unfolds.
It is impossible to know how long these trends will last, as the pandemic's effects are going to be determined by science and medicine and human behavior and the resulting rate of disease spread and deaths.
But we do expect that the massive global monetary expansion will be with us for many years.
In Part 4 of our series on interest rates and yield curve control, we will examine two charts and two related tables to help explain yield curve control and implications for the Treasurys market. The first three parts are available here:
Part 1 Part 2 Part 3 The first chart and table will depict certain yield curves as of September 30, 2019. We start here because this date falls prior to the pandemic's impact on global monetary policies. Chart 2 and Table 2 are as of November 30, 2020, and are assembled from the same data sources and depict the same yield curves but after the US election and after the announcement of forthcoming vaccines. We're assuming that markets have made most of the adjustments for the COVID shock and its aftermath and the US election cycle. We acknowledge that a January 5 political event could alter these charts. We plan on a part 5 and will attempt to capture any significant changes in it.
The visible difference between the charts is dramatic... Read more